Smartphone: The New Computer

The market for the smartphone—in reality a handheld computer for Web browsing, e-mail, music, and video that was integrated with a cellular telephone—continued to grow in 2008. According to research firm Gartner, in the second quarter, worldwide smartphone unit sales increased at a rate of 15.7% year-on-year. The fastest-growing market was North America, with 78.7% sales growth. Sales in Western Europe were up 29.3%.

The rise in sales was fueled in part by Apple’s introduction in July of the iPhone 3G (the 3G referred to third-generation wireless networks, which sent and retrieved data more rapidly). The iPhone 3G was in high demand; one million iPhone 3Gs were purchased during its first three days on the market. There were early technical problems, which included dropped calls and poor connections, but it was unclear whether the problems were primarily the responsibility of Apple or of AT&T, the only American network on which the iPhone could be used.

The iPhone and a similar device, called iPod Touch, created a new market for third-party applications software, such as games, that could be downloaded from Apple’s online App Store. Apple claimed that consumers downloaded more than 100 million applications, some free and some for purchase, in the first 60 days that they were offered.

Computers and Information SystemsDan Steinberg/APGoogle’s first smartphone, a model from Taiwan-based cell-phone maker HTC called the G1, used Google’s Android operating software. Like the iPhone, the G1 was controlled by a touch screen, but unlike the iPhone, it had a physical keyboard rather than a virtual one on the screen. The G1 was initially available only from T-Mobile in Europe and in the U.S., where it initially cost $179 with a two-year cell-phone contract, slightly less than the iPhone. The consensus was that the Google phone had broken little new ground and thus was simply a competitive phone introduced after the iPhone and the BlackBerry, from Research in Motion.

The popularity of smartphones was aided by another technological trend in the United States: more Americans than ever before were giving up their traditional landline telephones for cellular telephones. In a survey of Internet users by Jupiter Research, 12% said that they did not subscribe to a landline-telephone service, and another 12% said that they planned to switch from a landline to a cellular telephone in the next year. Another study, by market researcher Nielsen, said that 17% of all American homes relied exclusively on cellular telephones rather than landline telephones.

Wi-Fi Service

While the cellular telephone networks continued to serve a growing demand for data, short-range Wi-Fi (wireless fidelity) found in homes, hotels, restaurants, airports, and other public places continued to spread as a common wireless alternative for Internet access. The telecommunications industry began looking ahead to a new wireless standard, called 4G (fourth generation), that would transmit laptop and smartphone data faster than present-day cellular networks while greatly extending the range of its signals. Two competing wireless technologies—WiMax and LTE (Long Term Evolution)—were expected to form the basis of the new standard. In tests by T-Mobile and Nortel Networks, LTE was able to download data at speeds of up to 170 million bits per second and upload data at speeds of up to 50 million bits per second from a car that was traveling about 67 km (42 mi) per hour.

Philadelphia, the first American city to commit to a citywide public Wi-Fi network, tried to reinvigorate the plan after EarthLink abandoned the project in the wake of complaints about weak signals. The Wi-Fi network, which was 80% complete, was being taken over by local investors under the name Network Acquisition Co. Its plan was to sell Wi-Fi service to local businesses and use that revenue to pay for free public Wi-Fi in outdoor locations. The new network operators also hoped to generate Wi-Fi revenue through advertising and transaction processing, such as handling the sale of entertainment tickets.

Automobile manufacturer Chrysler said that it would offer Wi-Fi connections with Internet access as an option on its 2009-model vehicles. Called UConnect Web, the service was to be offered as entertainment for backseat passengers.

Delta said that it would offer Wi-Fi service on flights that traveled within the continental United States. Through an agreement with communications firm Aircell, Delta said that it would install Wi-Fi on more than 330 aircraft that flew U.S. routes, although installation would take until mid-2009 to complete. During flights passengers would be able to access the Wi-Fi network with laptops, smartphones, and handheld computing devices; the cost was to be $9.95 for flights of three hours or less and $12.95 for longer flights.

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